Thursday, November 2, 2017

Analysts React: "Tesla Bulls and Bears Dig in After Warnings of Production Delays" (TSLA)

The stock is down 24.75 (7.71%) at $296.33.
From the WSJ's MoneyBeat blog:
A rocky quarter for Tesla had the electric automaker’s fans and skeptics digging in on Thursday.
Shares dropped as much as 8.9% on Thursday morning after the company said it would be late to meet its goal of making 5,000 Model 3 sedans per week by the end of the year, and reported a wider loss than analysts had expected. Shares were off their lows late Thursday morning and recently traded down 7.4% at $297.50, their first time under $300 since May.

The firm built by Elon Musk has long been a polarizing company for investors and analysts, due in part to the stratospheric rally in its stock price in recent years, which has given it a market value that rivals seasoned automakers like General Motors Co. Tesla is up 39% this year, versus a 15% rise in the S&P 500.

Among the 27 equity research analysts whose Tesla stock ratings are tracked by FactSet, year-ahead share price targets range from $170 to $500. Analysts, who tend to skew bullish on the stocks they cover, are nearly evenly split on Tesla between buy, sell, and hold recommendations. The company is also a favorite of short-sellers, with big-name investors such as David Einhorn and Jim Chanos warning about the company.

Here’s what the bearish analysts had to say:

Colin Langan of UBS Group AG, which has a $185 price target: “We believe the market should not ignore fundamental challenges that persist with regards to TSLA’s Model 3 profitability, stationary storage & solar businesses, and eventual need to raise cash. We see increased pressure on demand as luxury automakers launch competing products in the 2018-20.”

Ryan Brinkman of J.P. Morgan Chase & Co., which lowered its price target to $185 from $195 Thursday: “With the 3Q report came management’s update that it now targets reaching 5K units per week of Model 3 production by 1Q rather than 4Q. Perhaps more disconcerting was the electing to not guide to the time when it would reach 10K per week (previously said to be sometime during 2018). The combination of these two guidance changes is likely to result in a significant reduction in production expectations… Investor (and analyst) expectations need to be materially reduced.”

Jeffrey Osborne of Cowen & Co., which has a $170 price target: “We left the call frustrated with the lack of transparency from Tesla management. Battery pack assembly is the primary culprit for the Model 3 ramp; however, multiple other auto production steps also need retooling. Backing off of 10,000 units/week in 2018.”

And here’s what the bulls had to say:

Ben Kallo of Baird, which has a price target of $411: “We believe TSLA has the talent to fix its manufacturing issues, and should hit its targets of several thousand Model 3s per week by YE:17 and ~5k per week by the end of Q1. We view this as a core growth stock, and would use weakness as a buying opportunity.”

Romit Shah of Nomura Instinet, which has a $500 price target:...MORE